Deputy prime minister Nick Clegg's flagship regional development scheme is "mired in chaos and delay" and £900 million behind schedule in attracting private investment, Labour has claimed.
Shadow business secretary Chuka Umunna said Labour would "act where this government has failed" and devolve £30 billion of Whitehall funding to English regions to help stimulate growth.
The £3.2 billion Regional Growth Fund has been championed by the Lib Dem leader as a way to support the economy across England.
Some £2.9 billion of Government support has been allocated, which is projected to deliver 573,000 jobs and £16 billion of private investment between now and the mid-2020es according to the Department for Business, Innovation and Skills.
But Labour said the scheme's annual report had identified that private investment was £900 million behind schedule, and some £750 million of the first £1.9 billion of public money allocated to projects had yet to be drawn down.
The report said: "The slower than expected delivery of private investment reflects the progress of the economic recovery, that has been gradually building momentum during 2013-14 following a period of uncertain economic performance.
"In addition, there have been some projects that have suffered from delays specific to their own plans, such as issues with planning permission."
Umunna, making the latest in Labour's summer series of attacks on the Government's record, said: "There are now less than nine months until the next general election, and Britain faces an urgent choice between the Labour future of long-term, better balanced growth, and the Tory threat of long-term decline, low wages and insecurity at work.
"We are now into the fifth year of Tory failure. The Conservative Party came to office promising to rebalance Britain's economy across all the regions with an export and investment led boom, and have failed.
"They abolished Regional Development Agencies without putting in place a proper replacement and their flagship Regional Growth Fund has been mired in chaos and delay. Now the Government's own figures show the scheme failing to meet its private investment target by almost £1 billion.
"We know that we will need to act where this government has failed, to drive strong growth for the long-term across the whole of the UK."
Labour would devolve £30 billion away from Whitehall to English regions under plans set out by former Cabinet minister Lord Adonis.
Umunna said Labour would also implement a long-term agenda to "grow our way to a higher standard of living across the regions".
He added: "There can be no future for Britain competing on the basis of low wages and insecurity with a Tory-led Government focused on short-term advantage that will lead to long-term economic decline.
"If we are going to pay our way in the world and generate growth that is better balanced and benefits all, we need to take a different and much longer-term approach - that is what Labour offers to ensure people can meet their future aspirations and dreams."
A BIS spokesman said: "Over the last year alone the Regional Growth Fund has more than doubled its impact and has secured the jobs it pledged to - over 80,000 direct jobs have been delivered, every one of them outside London.
The amount of private sector funding leveraged has doubled from less than £1 billion last year to over £2 billion.
"For every £1 of Government support, the private sector puts in £5.50. This compares to just 65p of private money secured by the Regional Development Agencies for every pound they spent. The RGF is therefore delivering much greater value for money for the taxpayer.
"This combined with the Growth Deals we recently announced is ensuring that our economy grows in a balanced way, with all of our regions benefiting from the upturn."
Business minister Matthew Hancock said: "Under Labour there wasn't a Regional Growth Fund - and indeed there wasn't regional growth. Our Regional Growth Fund is on track to deliver the government investment we promised.
"Labour presided over the deepest recession this country has seen since the war - making the whole country poorer, and putting people across Britain out of work.
"It's clear that Labour still hasn't learned its lesson. They try to talk about supporting balanced growth - but their plans for more spending, more borrowing and higher taxes are exactly what got us into a mess in the first place. No wonder even Labour advisers are attacking the party for being anti-business.
"All Labour can offer is more of the same - they have no plan for Britain. We need to stick to our long-term economic plan, which has got 1.8 million more people in work, and is securing a better and brighter future for Britain."